MANILA, Philippines — The National Economic and Development Authority (NEDA) has downplayed the bleak economic forecasts made by the International Monetary Fund (IMF) and US-based rating agency Standard and Poor’s for the Philippines.
S&P said it expects the Philippine economy to grow 2.2 percent this year while the IMF forecasts a 2.25 percent gross domestic product (GDP) growth for 2009. Both projections are way below the government’s official GDP forecast range of 3.7 percent to 4.7 percent.
The two global agencies said the Philippines’ exposure to global drivers such as exports makes it vulnerable to the negative impact of the financial crisis.
However, in a press briefing over the weekend, NEDA director for policy and planning Dennis Arroyo said the S&P’s and IMF’s projection are too skeptical.
He noted that the growth of the economy in the last three months of last year exhibited the country’s resilience even in the wake of the turmoil.
“The crisis began in September and hit hard in October, November and December. Hence the fourth quarter of 2008 was already in the crisis era. Yet the economy still grew by 4.5 percent (in the fourth quarter of 2008). We expect the growth momentum to continue at least for the first quarter and second quarter of 2009,” Arroyo said.
The Philippine economy grew by 4.6 percent in 2008.
The NEDA official said there are other export drivers such as the response of Middle Eastern countries to the crisis through additional spending on infrastructure projects.
“This will boost OFW inflows,” he said.
Furthermore, he said the expected decline in inflation to an average of six percent this year from 9.3 percent in 2008 would also help boost consumption.
“The government is pump-priming with small infrastructure projects in 2009. The second wave of large infrastructure projects will follow in 2010 and beyond. That will boost public construction,” he said.
On the other hand, S&P said even a growth-supportive monetary policy would not fully offset the impact of slowing external demand and declining remittances. It even said the Philippines could post zero growth.
S&P said in its latest Asia-Pacific Economic Outlook that growth would slow down as global conditions worsen.
By 2010, however, the global debt watcher said the economy could bounce back to a growth of 3.7 percent to 4.2 percent.
Similarly, the IMF said the Philippine economy would likely slow to just 2.25 percent because it is very much caught up in the kind of global factors that are affecting the region.–Iris C. Gonzales, Philippine Star